Commentary

100.2 Impact on the drafting of a shareholders’ agreement

BUSINESSES vol 4(2) start-up, sale and purchase
| Commentary

100.2 Impact on the drafting of a shareholders’ agreement

| Commentary

100.2 Impact on the drafting of a shareholders’ agreement

Many of the restrictions in a typical shareholders’ agreement, if applied to the company, would have the effect of fettering its statutory powers. One solution is to exclude the company altogether from participation in the shareholders’ agreement. If it is only the shareholders which enter the agreement, Russell v Northern Bank can have no effect1.

The parties may however see some advantage in joining the company itself into the shareholders’ agreement. Where there is no, or little, chance that the company’s obligations will be interpreted as an unacceptable fetter on its Companies

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